Month: March 2008

Book Review: How Starbucks Saved My Life: A Son of Privilege Learns to Live Like Everyone Else

/ Adam Nash / 3 Comments

This past weekend, I had the chance to finish off three books that have been on my short list for a while. This post is a review of a fun one, How Starbucks Saved My Life: A Son of Privilege Learns to Live Like Everyone Else.

Overall, while it has its faults, in many ways I gave this book my second highest form of praise: I’ve already loaned it out to two people.

I’ve actually realized that with books, for me, they end up falling in one of the following categories (from lowest to highest):

  • 1 star: This is a book so poor I basically decline to finish it. Since I tend to read almost compulsively, it really takes a terrible book to lose me like this.
  • 2 stars: This is a book that I finish, but poor enough that I find that I’m not proud that I’ve read it. It gets hidden away on a low shelf, or packed away, or donated. I have no interest in reading this book again.
  • 3 stars: This is a good book, and I’m happy to have it around to remind myself that I’ve read it. I tend to publicly display it on my bookshelves, although it’s unlikely I’ll ever read it again.
  • 4 stars: This is a great book – so good that I actually find myself recommending it to friends with similar interests. I not only display it on my shelves, but I’ll actually actively loan it out to encourage others to enjoy it as well. Sometimes I will buy multiple copies as gifts for friends.
  • 5 stars: This is a truly great book that actually connects with me. I can tell when a book is this good because I find myself coming back to it and reading it again, either in parts or in its entirety. Not many books fall into this category for me, but the ones that do are close to my heart.

This book was 4 stars for me… I doubt I’ll read it again, but I enjoyed it enough to recommend and loan it to friends.
So what did I like about this book?

A few things really.   First, I actually enjoyed the character (the author).  He offered me a legitimate insight into an anachronistic personality type – the Upper East Side aristocrat, raised in enough privilege to be completely divorced most of his life from feelings of economic insecurity.  I might be biased here, since growing up on the west coast leaves me less tolerant of this type of character.  Still, it’s fascinating to hear from someone who grew up meeting the truly famous and powerful, went to Yale and got a job purely on connections through Skull & Bones, and then had a full, successful career without ever really learning math or how to handle money.  There is definitely some form of schadenfreude here.

Second, despite the heavy-handed repetition, I enjoyed the basic epiphany of the journey – the realization that a supportive, friendly environment can in fact be a part of a great company and workday.  Starbucks clearly comes from the west coast, modern style of company, but there is some delight in his simple realization that Starbucks offers health insurance, stock options, and a respectful & enthusiastic culture for its employees (nee, partners).

Third, I thought there were some genuine personal economic insights here.   You can be rich and “successful” your whole life, but without some attention to personal finance, you can find yourself in significant financial trouble in your later years.   In this book, the author is laid off in his 50s, does some lightweight consulting for a while, and finds himself almost broke in his 60s.  The additional fact that he has an affair which leads to an expensive divorce at this late stage is worth noting as well.  There are very, very few people who are truly wealthy enough to be able to ignore the realities of managing your money.

Lastly, I enjoyed a much more subtle point in the story.  It’s the fact that, in the end, happiness in retirement has a lot to do with the availability of social interaction.  For many lucky people, this comes from family & friends.  In this case, the author has alienated much of his family, and as a result, he only discovers this fact through Starbucks.  Truth be told, there is something meaningful about the idea that, even in “retirement”, it might be extremely rewarding to be in a job where your day-to-day involves friendly & respectful interaction with new people, regular customers, and a dedicated service team.  The job offers him more than money, more than health insurance.  It offers him goals, tasks, social interaction, and comraderie.  It offers him purpose, and that is often underestimated in the most common misperceptions about what is important in retirement.

What I didn’t like

This book will be tough to take it you react negatively to an overdose of corporate culture speech and repetition.  The author talks about “partners” and “guests” and “respect” almost relentlessly.  He also glosses over the details of anything negative – his entire affair, divorce, and illegitimate child get mere paragraphs.  Cleaning the bathrooms at Starbucks get pages.  This is book is mostly about his experience at Starbucks, and you could get jaded to it if you believe that this book is largely company propoganda.

Conclusion

The great thing about this book is that it largely doesn’t overstay its welcome.  It’s short and sweet.  An easy evening read – small pages, large font.

I particularly recommend it for people of a few disparate types of interest:

  • Personal finance & retirement
  • Starbucks fans
  • People in this age group (50+) who can empathize with the rise of uncertainty and change in the labor markets for professionals

If you do read it, let me know what you think here in the comments.  The links above will take you directly to Amazon, and the copy of the book that I ordered.

Don’t Count Out the Fed

/ Adam Nash

Still digesting the news from the Fed yesterday on the new $200B Term Securities Lending Facility.  This type of arrangement has been discussed for some time as a possibility, but its still dramatic to see it unveiled like this.  This is a big deal for a couple reasons – first, it allows for 28-day loans, not just overnight, and second, it allows a much broader range of bonds as collateral, including mortgage-backed securities.  Combined with the other two $100B initiatives, the Fed has opened up over half of its $700B+ balance sheet to stabilize the credit markets.

Wow.

It’s becoming fashionable in circles to doubt the Fed.  I’ll be posting a book review of “Greenspan’s Bubbles: The Age of Ignorance at the Federal Reserve” soon, and I’ve seen a lot of commentary doubting Mr. Bernanke.  All I can say at this point is that it is way too soon to be counting out the Fed.

They can’t work miracles, of course, but the power of almost unlimited resources is significant, if wielded properly.

The most fascinating aspect about central banking is it’s amazing foundation on the irrational and the immeasurable.  In the end, it’s more about confidence than anything else.  By convincing the markets that you will solve the problem, you create the confidence that increases liquidity and solves the problems.  You can’t be predictable, because, like in warfare, predictability leads to people thinking steps ahead and countering your actions.  Like a great General, you have to be unpredictable enough to instill fear and uncertainty in those who would fight against you, and through that uncertainty, ironically you win.

So you want uncertainty, but only the type that destabilizes those that would bet against you.  You want to reduce uncertainty around the likelihood of Fed success.

Got it?

If the juxtuposition sounds funny, blame it on the fact that I read the Greenspan book and a biography of George Washington all within a two week period.

Anyway, at times like this, it’s good to remember that the guy we have at the helm, at this time, is someone whose fundamental academic expertise is the mistakes made in the 1930s Great Depression, and the mistakes made in Japan in 1990s.  A quick reference from Paul Krugman:

What you probably should know is that Ben Bernanke, in his capacity as a professional economist, spent a lot of time worrying about Japan’s experience in the 1990s. (So did I.) What was so disturbing about Japan was the way monetary policy became ineffective; by the later 1990s the short-term interest rate was up against the ZLB — the “zero lower bound.” This is alternatively known as the “liquidity trap.” And once you’re there, conventional monetary policy can do no more, because interest rates can’t go below zero.

Krugman also points out that today’s TED spread indicates a mixed message – confidence seems better slightly, but not significantly.  That could be an indicator that the weight of uncertainty.  Still, in his own words, yesterday’s move was a big slap in the face for the credit markets.

I can’t wait until the weekend when I have time to dig into all of this further.

Beware of HELOC & 2nd Mortgage Traps on Refinancing

/ Adam Nash / 2 Comments

I found this article today on Money Musings about the pitfalls of trying to refinance your mortgage when you have a 2nd or HELOC on the house:

A significant number of my personal acquaintances purchased homes (newer, larger) within the last several years. Inevitably, they were also convinced that financing via an 80/20 first/second mortgage setup was the way to go. Doing so is “financially smart,” because it allows them to avoid paying private mortgage insurance.

It’s an idea that works … until it doesn’t. Consider this Baltimore resident’s story, for instance:

Baltimore Sun: “Some Lenders Block Refi Ability”

He needs to refi out of his nasty ARM first mortgage — he’s lucky, in that he does have decent equity in his home — but his second-mortgage holder won’t agree to a re-subordination.

Under any circumstances.

I think the 80/10/10 is more common here in the Bay Area, or at least was, back in 2003/2004.  The 80/10/10 is  80% first mortgage, 10% HELOC, and 10% down payment.  No mortgage ensurance, and you get a HELOC which can be useful if you need to tap assets for some reason.

This is a pretty good example of how liquidity in a market like mortgages which isn’t centrally brokered can quickly jam up.

I’ve also seen stories lately of banks literally calling due their HELOC loans with fairly short notice.  Seems to be tied to people who are underwater on their houses (debt is greater than value of house). Not a good thing if you don’t have the liquidity to cover the outstanding balance, or if you were depending on your HELOC as an emergency fund.

Another lesson on why, in the end, liquidity can be one of the most important aspects of personal finance.   People tend to focus on rates of return, which of course, is a good thing to focus on.  But when you need money, it’s amazing how rates of return give way to the simple ability to tap assets for cash.

Why Everyone In My Family Has Blue Eyes, Except Me

/ Adam Nash / 2 Comments

Today, I discovered “The Spitoon“, the blog from 23andMe, the company dedicated to personal genomics.   Really interesting material.  I found this article particularly eye-catching:

SNPwatch: One SNP Makes Your Brown Eyes Blue

I’m curious about this, of course, because while I have green eyes, my wife Carolyn & my two sons have blue eyes.  It seems that this isn’t even due to a single gene – it’s literally a single nucleotide pair.  From the article:

Three recently published papers (here, here, and here) report that a single SNP determines whether a person’s eyes will be blue; every blue-eyed person in the world has the same version. The findings also suggest that the blue-eyed version of the SNP can be traced back to a single ancestor that lived about 6,000 to 10,000 years ago.

It’s been known for a while that eye colors like green and hazel (deviations from the brown color found in the majority of people) can be explained by SNPs in a gene called OCA2. The protein made by this gene is involved in the production of melanin, a pigment found in the cells of the iris. This is the same pigment that gives your hair and skin their color. Darker eyes have more melanin than lighter colored eyes.

But none of the known variations in OCA2 could explain blue eyes. The new research seems to have solved the mystery. A SNP near OCA2, but not in it, determines whether a person will have blue eyes.

The SNP, rs12913832, is actually in a gene called HERC2. Scientists think that instead of affecting HERC2, the SNP controls how much protein will be made from the nearby OCA2 gene. Low levels of OCA2 protein, caused by the G version of the SNP, lead to lower levels of melanin, which in turn leads to blue eyes. 23andMe customers can check their genotype at this SNP in the Genome Explorer or in the Gene Journal (Note: In the Gene Journal you’ll see other SNPs also associated with eye color. The combination of these SNPs with the blue-eyed version of rs12913832 can end up giving a person green eyes instead of blue).

What a great blog.  Sign me up for that feed.

As a side note, Michael Arrington has posted his account info from 23andMe on TechCrunch, so you can live vicariously through him in case you are short $1000.  I have to admit, seeing those results makes me jealous – I’d love that kind of genetic detail on myself & my family members.

How to Delete Individual Backups from Apple Time Machine

/ Adam Nash / 60 Comments

Some of my most popular blog posts, over time, have been tips & tricks I’ve posted about how to get certain things done on the Mac.  My rule of thumb for these posts is simple – if I get stumped about how to get something set up, and then after an hour of searching I find the answer, I share it here.  My hope is that I’ll save other people that hour of searching.

This post is about a question I had today:

How to delete individual backups from Time Machine?

The problem I had was that the 1TB drive I have for Time Machine backups was full.  Now, Time Machine is very good about deleting the oldest backups on an ongoing basis to manage space.  But what if you just “need” extra space on that drive?  In my case, I needed to free up about 200GB so I could copy over some files, temporarily, from a drive I was retiring.

Time Machine has a very unique UI.  No menu bar, so no obvious place to click “delete a backup”.  I looked everywhere.  I clicked through to individual backups, but could see any button that said “remove” or “delete”.

Then I found this Mac OS X Hint from the always helpful macosxhints.com.

Turns out, when Time machine presents you with the “Finder-like” interface to your drive, it changes, subtley, the menu-items of the “gears” menu on the window.  I say subtley because, of course, there is no visual indication that the “gears” menu has different menu items in this context.

One of those menu items is “Delete Backup”.

So, to delete a full backup, you just do the following:

  1. Navigate to the date you want to delete.  In my case, I wanted to delete my oldest backup, from 1/30/2008.
  2. Navigate in the Finder window to your overall machine.  In my case, it’s called “Powersmash G5”, where I have 2 internal drives that are backed up.
  3. Select the “Gear” menu, and select “Delete Backup”
  4. Enter the admin password for the Finder, if it asks.

My guess is that Apple wasn’t trying to make this hard – they are just suffering from a non-standard interface, and then an overloading of that “gears” menu, which I’m sure is theoretically supposed to be a “contextual menu”.  For me, a menu that showed on on right-click of either the finder window itself or the Time Machine backup marker on the right would have been more obvious to me.

Hope this tip is useful to someone.  It sure helped me today.